I feel like people freak out a little bit every fall and winter when the first couple of free agents sign. The dollars get announced and the reaction is some form of “wow, what an overpay!” and “if [Player X] gets that, [Player Y] is going to get insane dollars!” We’ve seen a little bit of that in the wake of last night’s Tim Lincecum signing, with people’s reactions ranging from merely raising an eyebrow to being fully gobsmacked.

I’m in more of the eyebrow-raised camp. It’s probably a bit of an overpay given Lincecum’s performance over the past couple of years (though it is a pay cut). It’s also a bit of a gamble inasmuch as, a decent strikeout rate notwithstanding, there is no guarantee that Lincecum will be a front line starter ever again. Or even an average one. We’re now more than two years past the last good Lincecum season and more than four years past the truly dominant Lincecum still stuck in our head. He could be Barry Zito redux in performance, if not in contract duration, for the rest of his career.

But we should probably limit our response to the dollars involved to raised eyebrows and wait a few months before truly committing to a reaction. Both to Lincecum’s deal and the deals of other free agents this winter. Because the changing financial structure of baseball is rendering the sorts of deals we once considered to be crazy fairly run-of-the-mill these days.

Yes, $35 million for two years is an awful lot of money. But you know what else is an awful lot of money? The $30-$40 million (estimated) each team will be getting each year from new national television deals with ESPN, Fox and TBS. That is, $30-$40 million for doing absolutely nothing. That’s before you add on increases in local deals many teams are experiencing and the overall trend of rising revenues across Major League Baseball. A trend that the San Francisco Giants and their nearly-full ballpark are taking pretty decent advantage of.

We’re not in the same financial world in which we found ourselves in 1992, 2004 or even just a couple of years ago. Teams have more money to spend and, thanks to restrictions on how much amateur talent can be paid, they have fewer places to spend it. It makes perfect sense, then, that the price of an average pitcher with some upside (or any number of other free agents who will soon sign) will be a lot higher than it used to be. As such, the dollars that used to only go to the best of the best will now be going to the middle of the pack. The superstar dollars will go way, way up too.

Despite this dynamic, I feel that fan and, in some cases, media reaction to these understandable increases is still stuck in 1992, 2004 or even just a couple of years ago. It sort of reminds me of my dad who, whenever gas prices go up, reacts as if it were still 1959 and, dadgummit, gas shouldn’t be more than twenty-five cents a gallon. As if the price of any commodity, be it gas, foodstuffs or elite baseball players shouldn’t be expected to rise in the face of scarcity and increased demand.

Anyway: it’s possible that the Lincecum deal will look bad in a few months or a year from now. It’s also possible that this deal is simply what a player of Lincecum’s caliber — adjusting for the short-length of the deal and his status as a fan favorite — can be expected to command. Whatever happens with him, though, we need to remember that player salaries are going up for rational reasons and that the definition of a massive deal in 2013-14 is not the same as it was even a few short years ago.

The long, dark off-season is almost upon us (the moment the World Series ends). Folks need something about which to freak out, intead of actual baseball. Free agent salaries is one of those things, along with managerial hirings, trades and other personnel moves; awards; and Hall of Fame voting.

@Craig – “As if the price of any commodity, be it gas, foodstuffs or elite baseball players shouldn’t be expected to rise in the face of scarcity and increased demand.”

Econ 101 lesson – SCARCITY is not the reason you are paying more at the pump or the grocery store… In fact – by its very definition, a “commodity” is fungible – meaning it is easily replaced by multiple alternatives. And no, “elite baseball players” would not be considered fungible commodities – they would be considered “unique”. There is no exact replacement for Justin Verlander, for instance – he is a unique individual. You might find someone to replace some of his stats, but his total value as an individual can never be completely duplicated.

The primary reason you are paying more than your father did in 1959 has to do with Western society’s belief in the value of incremental price inflation over time. In fact, the US Federal Reserve’s #1 job is to maintain that incremental price increase – our entire US economic policy relies on it. I’m not saying that’s a good thing – in a lot of ways it is truly just as terrible as your father believes it to be. But, that’s the system we’ve got.

Would you give either one of those pitchers a $17M deal? The Giants just gave Pitcher A one. Pitcher B is Phil Hughes. If he’s looking for a $17M/year deal and the market is going to give him one, do the Yanks extend him a QO?

Right. The problem is that Lincecum sucks. If he was a decent bet to be a reliable mid-rotation starter, then the “price is going up” argument works. But Lincecum’s stuff is down, his control is horrible, and he’s homer prone with a high walk rate as a result.

Average NL ERA this year was 3.74, he’s a full run above that in a home park that is pretty generous to RHPs. He’s been horrible.

This argument would work better for the Pence deal, because he at least has the promise to be a league average RF for much of his contract.

How much of that previous dominance is relevant when there has been a clear “stuff” degradation over the past two years? Unless the Giants are somehow aware that Lincecum is going to regain at least some of his lost fastball/slider velocity, 2011 doesn’t really matter anymore.

paperlions - Oct 23, 2013 at 8:34 AM

Yeah, but that Lincecum is gone and he ain’t coming back (or, at least, is unlikely to). Much of Hughes problem is that his stuff is a horrible match for his home park. As a FB pitcher in a place where pop ups to LF are HRs, he is crushed by his home park. If you put both guys in SF, Hughes would likely be far better at preventing runs than Lincecum.

Hughes problem is similar to that of Porcello. The guy is an extreme GB pitcher with a horrible defense behind him. Put him in front of a good defensive infield and Porcello will look a lot better.

churchoftheperpetuallyoutraged - Oct 23, 2013 at 9:00 AM

Lincecum hasn’t been a “top pitcher” since ’09. In ’10 and ’11 he had a 3.08 ERA which, in that ballpark, equates to a 120 ERA+. For a quick and dirty reference here’s a few other top pitchers during that time:

CC – 139
Verlander – 145
Kershaw – 147
King Felix – 135

And as Kevin and PL mentioned, the Lincecum from his CY days is long gone.

dan1111 - Oct 23, 2013 at 10:19 AM

@Kevin, @paper, @church: I think there is more hope for Lincecum to rebound than you suggest. Pitchers who have dominated like he did are frequently able to make adjustments and still pitch well with reduced fastball speed. And he still strikes out a lot of batters.

Of course, it is far from a sure thing, which is why I think this contract is way too expensive (one might even say I am freaking out about it). But he definitely has upside.

paperlions - Oct 23, 2013 at 10:23 AM

I am totally willing to believe this. Who are the examples of pitchers who dominated, then sucked, then dominated again? How many of these guys were there compared to guys that dominated, then sucked, and continued to suck?

churchoftheperpetuallyoutraged - Oct 23, 2013 at 10:51 AM

I think there is more hope for Lincecum to rebound than you suggest. Pitchers who have dominated like he did are frequently able to make adjustments and still pitch well with reduced fastball speed. And he still strikes out a lot of batters.

When is going to start making adjustments then? The last two years have been awful (see the Hughes comparison). Even by advanced stats, we have:

fWAR: 0.9, 1.6 (below average)
rWAR: -1.7, -0.6 (below replacement)

His average fastball velocity has dropped almost every single year, and because of that he’s started throwing his slider more than his changeup (because the difference isn’t enough so people are teeing off on the fastball).

It’s entirely possible he reinvents himself as another pitcher. But what is he waiting for to do it?

APBA Guy - Oct 23, 2013 at 12:51 PM

Huge difference in what each pitcher means to the franchise though. What we don’t have in all this is a sense of the draw Lincecum attracts to AT& T. The Giants know those numbers (they were one of the first teams to introduce dynamic pricing, based not only on the opponent, but on the starting pitcher.)

Basically, Timmy and Pence signed for a combined 2014 salary equaling their 2013 pay. Timmy took a cut and Pence got a raise equal to the cut, in terms of AAV. That leaves the Giants with Zito’s $ 26M off the books and available for FA and arb awards, plus any additional cash from the net of TV contracts.

So the Giants needs (left fielder, 2 starters, utility infielder) are probably still too great for the cash available for a star at each position, but not for 1 star and a couple of journeymen. Timmy’s deal is maybe $ 4M too high. The Giants obviously feel like that’s not going to be critical to addressing their needs, and is a worthwhile investment from a marketing standpoint.

After that TOOTBLAN bellyflop I don’t know if he gets to be any higher than Viscount.

gibbyfan - Oct 23, 2013 at 8:27 AM

I guess by Craigs reasoning we shou dlreally feel sorry for Kyle Lohse last year………….I do understandyou though Craig–free market country the only thing that counts is what the market will bear………….but how about we given a little more choice by being able to opt out of the mandatory fee on our cable bill.

Cable is essentially a utility……What should be easy is opting out of the sports package if you dont want to pay the surchage —just like we can do with HBO etc. Isnt that what the free market is really all about……….What could be wong with that….that want to pay up to support the insanity would be free to do so…….
There is action wending its forward through Congress on that right now……The lobbyist may not have the clout to buy this one

stex52 - Oct 23, 2013 at 8:29 AM

All very sensible, Craig. But the numbers still look pretty insane to all of us average Joes and Janes.

The sad thing is it’s true.
First, is this a lot of money to give to Timmy who has been terrible the past two years, yes. But I always remember even if you over pay for a player let it be for one or two years instead of seven. Second the guy is beloved in San Fran and he did look a lot better the last two months of the season plus the Giants just wanted to lock him up before he hit free agency. Yes most likely teams would not have given him 18 mill a year but is it so strange that he could of gotten 15-18 for one year? Maybe from a team like Seattle, Rangers, Dodgers or even Angels
The Giants aren’t exactly poor guys getting sucked dry by big contracts. They get over 3 million fans a year and have won 2 world series in the past few years. They are rolling in cash and as Craig stated they get 40 mil. Just for being there.
So yes let Them throw around a ton of money as long as it’s not in the 5-7 year range.

Yes Pence got a 5 year deal but in all honestly it looks like one of the better deals made in a long time for the giants. You can name a bunch of bad contracts these guys have done that had a lot less upside then Pence ( Rowand, Zito, Renteria)

IF (and it is a big if) Lincicum can come in and go back to half of what he was then this deal is not at all poor. The Giants don’t have that much in pitching prospects to come up ready to be a number 3-5 guy (as far as i can recall that is) So this by large is not a bad gamble. Yes he is over payed but at the very least he has a resume that at one point was one of the most dominant starters in the game and his strike out rate was still at norm this year so there is a bright side to this. I have always been a fan of Timmy so I am rooting for this guy to find his way back. The Giants need him and Maybe just maybe they can strike lightning in a once very talented bottle.

I’m not going to argue your overall points, yankee, because they are good. My quibble is over length of contract. I’ve liked Pence for years. But I wouldn’t have gone five years with him. He overcomes his lack of baseball instincts with pretty good talent and hard work. I think in two or three years that is going to be much tougher for him.

I agree with the point that it is better that more of the fan’s money ends up in the pockets of players than of the owner. To me, it is always better for the money to go to the talent rather than the facilitators.

If I were a Giants fan, my concern would be more about them filling up the roster with guys unlikely to result in more talent than was on the 2013 roster and filling up the payroll with contracts that constrain their ability to buy more talent.

To me, the Lincecum deal is a bad baseball decision because he is a high cost – high risk asset. Pretty much the best case scenario is that they get their money’s worth out of it. The more likely scenario is that he continues to be horrible and isn’t any better than 1/2 of the pitchers on their AAA roster, which represents a poor use of assets.

The Pence deal is not as bad, because he is more likely to actually be a useful player for most of the contract.

To me, this is more about use of resources and roster construction rather than a condemnation of spending per se.

Well his larger point is correct, that salaries should be escalating and we can’t look at them a la the 50s and say, well Mantle only got X so why is this bad player getting three times X?

However, I think Craig picked a horrible example to use. As yankeepunk3000 mentions, Pence’s deal might have been the better example. He’s an above average player who got a lot of money, but when taken into context of the money available, you have to readjust your ideas of what an above average player should make.

Lincecum has been below average the past two years. If a GM gives Phil Hughes, who’s younger than Lincecum I might add and pitched in a far worse park, a $17M a year contract, he should be fired on the spot.

No, I get where he’s coming from, and anyone pointing back to 1950s salaries or some other such nonsense is way off the reservation.

I just think that there ARE legitimate questions that should be raised over the wisdom of a deal like this, and they shouldn’t be dismissed as jealousy, people longing for ’50s nostalgia, or just the usual ESPN/sports radio-style flipping out.

stex52 - Oct 23, 2013 at 10:00 AM

They are paying for the hope that he can find his way back to where he used to be. And it is a reduction in salary.

The Hughes situation is different. He doesn’t have the body of work to gamble on. I will be surprised if he gets that amount.

churchoftheperpetuallyoutraged - Oct 23, 2013 at 10:56 AM

They are paying for the hope that he can find his way back to where he used to be. And it is a reduction in salary.

From four years ago, that’s insane. Let’s take out the Lincecum part and look at two other players.

’09 wOBA/wRC+
Pujols – .447/180
Arod – .401/140

Anyone want to make a bet that Pujols is going to hit a 180 wRC+ next year? Or that Arod will hit 140?

stex52 - Oct 23, 2013 at 11:23 AM

Just for clarity, COPO, I didn’t say that it was the most sensible move ever. It was more an argument as to why Hughes will probably not get the same offer.

I think the deal probably relates more to this recurring nightmare Brian Sabean has where he releases Lincecum, who goes on to pitch in the World Series for the Dodgers.

I think anyone who looks at prices for a living should always ask themselves when a prices seems out of whack whether they are seeing the emergance of a new “market”, or if the seller really doesn’t know what they have.

This plays out in commodity trading all the time, and it plays out every off-season. The early signee’s contracts get more scrutiny than the people who will sign around the winter meetings, and come spring training we’ll all go: “Oh, that contract wasn’t so out of whack with the rest of the free agents”

I freak out to these deals because that money is coming from someone and that someone is us. The prices we pay to not only go to the games, but to ward at home is insane. Maybe it won’t ever happen, but at what point does professional sports price it’s self out with the average fan?

Problem is, the Lincecum contract doesn’t reflect a new market price. It reflects Sabean overspending needlessly. And it’s VERY simple to show this.

If Sabean extends Lincecum a Qualifying Offer of $14MM, he’s going to accept. The reason for this is obvious: no one is going to give Lincecum an offer better than $14MM on a one-year deal AND give up their first round draft pick. Even with massive inflation, Lincecum is not worth a multi-year deal and a draft pick. Sabean effectively has a team option for 2014 for $14MM, and he’s NOT taking it. He’s instead tacking on a one-year $21MM contract to the end. Which is only worth it if he rebounds to his form of THREE seasons ago AND keeps it up for the next two years.

Even if you account for massive inflation due to the influx of money to the new market, it still doesn’t erase the fact that Sabean could’ve had him for one year and $14MM.

Even if/when the market explodes and Ellsbury gets $150MM and Cano $250MM and Garza $100MM, it won’t make the Lincecum contract look good in retrospect. In fact, it will make it worse, as he could very likely have had him on a cheap one-year deal.

Now, this analysis does ignore the possibility that Lincecum reads the market and decides he can get $14MM+ on a multi-year deal, so declines the QO and gets 2/$35MM elsewhere. Even with exploding markets, I doubt a mediocre starter can get that much. (We’ll see, I guess. If the Bronson Arroyos of the world get $35MM, then maybe I’ll feel foolish.) And even then, Sabean is joining an expensive market AND giving up a draft pick in order to do so.

Would Lincecum have taken the Giants’ qualifying offer? I don’t know. $14 mil, one year, and an opportunity to reestablish his value in a comfortable environment and pitcher’s park sounds like a good deal, based on his performance in the last two years.

Any long-term offer from another team would, presumably, be reduced in years and annual value from what he considers his peak market rate.

His $100 million offer that he turned down from SF for 5 years has largely been salvaged. (2 years at $40m + 2 years at $35m). Going into this offseason, I think he was preparing for much worse.